Jafferjee, A.A. V. Subbiah Pillai, P.R.

1953 Present : Gratiaen J. and Gunasekara J.

A. A. JAFFERJEE et al., Appellants, and P. R. SUBBIAH PILLAI et al., Respondents

S. C. 319-D. C. Colombo, 17,563

Contract-Sale of goods- Executory contract-Price in excess of statutory maximum-Illegality-Refund of part payment of price.

Where, in a contract for sale of goods, the price agreed upon exceeded the statutory maximum permitted by a Price Control Order which was in operation at the time when the contract was entered into-

Held, (i) that the contract was contrary to public policy and, therefore, void. The supervening circumstance that the control was lifted, and the price charged became legal, during what remained of the period fixed for delivery of the goods could not have the effect of removing the taint of illegality which vitiated the contract at its very inception.

(ii) that the defaulting seller could not, in the circumstances of the case, be ordered to refund any payment made to him under the illegal contract.

APPEAL from a judgment of the District Court, Colombo.

N. E. Weerasooria, Q.C., with F. A. Kandiah, W. D. Gunasekera and Ivan Perera, for the defendants appellants.

H. V. Perera, Q.C., with H. W. Tambiah, C. Renganathan, and F. Arulambalam, for the plaintiffs respondents.

Cur. adv. vult.

March 25, 1953. GRATIAEN J.-

The plaintiffs who are a firm of dealers in Colombo sued the defendants in this action for the recovery of an aggregate sum of Rs. 38,500 alleged to be due to them for failure to deliver certain goods in terms of two separate contracts.

As to the first cause of action, they pleaded that the defendants had on 31st October, 1946, agreed to sell to them 500 bags (each containing 2 cwt.) of grain known as " vallai chelam " or " juwari " at Rs. 31 per cwt. to be delivered in Colombo on or before 30th November1, 1946 ; that they had paid to the defendants a sum of Rs. 1,000 in part payment of the purchase price ; but that the defendants had failed to deliver any part of the goods within the stipulated period.

As to the second cause of action, they pleaded that the defendants had on 2nd November, 1946, agreed to sell to them 500 bags (each containing

200 lb.) of " kambu arisi " or " bajiri " at Rs. 35 per bag to be delivered to them in Colombo on or before 30th November, 1946 ; that they had paid to the defendants a sum of Rs. 5,000 in part-payment of the purchase price ; but that on this occasion too the defendants had failed to deliver any part of the goods within the stipulated period. The defendants admitted that they had contracted to sell 500 bags of " juwari " and 500 bags of " bajiri " to the plaintiffs, that the contract price of the consignment of " juwari " was Rs. 31 per cwt. and that they had received Rs. 1,000 and Rs. 5,000 respectively as advances against these transactions. They fixed the date of each contract, however, at 1st November, 1946, and the contract price for the consignment of " bajiri " at Rs. 43 per cwt.; they also alleged that the date fixed for delivery in each case was not "on or before 30th November, 1946 " but " against November/December shipment". They counterclaimed a sum of Rs. 15,096 o 69 as damages on the ground that the plaintiffs had refused to accept the goods which were duly tendered to them on their arrival in Colombo in January and February, 1947, respectively.

The parties had not taken the elementary precaution of having the terms of either contract reduced to writing, and each side in turn alleged that the other had deliberately presented a false version of the facts with the aid of documents fabricated for the purpose. The manner in which the litigation developed at the trial left no room for a decision that there possibly might have been a genuine misunderstanding as to the terms of either transaction in respect of date, price or the time for performance. At the close of the evidence, senior Counsel for t

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